Happy 20th birthday to the euro!

In circulation since 2002, the euro was unveiled to financial markets on 1st January 1999

New Year’s Day was the 20th anniversary of the presentation of the euro to the world’s financial markets as an accounting currency (although it did not come into circulation until 1st January 2002), and after two decades the survival and consolidation of the common currency is being hailed as one of the EU’s most tangible achievements to date.

Despite the ups and downs of the intervening period, the euro remains in use in 19 EU Member States, and is the second largest and most traded currency in the world after the US dollar. This is despite the initial growth of the currency being abruptly halted towards the end of 2009, when the sovereign debt crises of Ireland, Greece, Portugal, Cyprus and Spain severely weakened the euro as financial rescue packages were implemented.

In consequence, the ECB reduced the base lending rate to just 0.05 per cent, and the result was a period of fluctuation in the value of the euro against the dollar: in 1999 one euro was worth 1.16 dollars, but it rose to 1.60 dollars in 2008 before collapsing to 82 cents two years later. At present the exchange rate is back to its initial level.

The idea of a pan-European currency dates back to the introduction of the ecu in 1979, but it was not until 1990 that Jacques Delors proposed the common currency which was further advanced by the Treaty of Maastricht in 1992. The conditions for joining the euro included maximum permitted inflation rates and a public deficit level of under 60 per cent of GDP (in Spain the rate is still close to 100 per cent, despite a slight drop over the last two years).

In 1995 the new currency was given its name, and three years later 11 of the 15 nations then forming the EU approved its introduction. Those adopting the new currency in 2002 were Germany, Austria, Belgium, Spain, Finland, France, Greece, Ireland, Italy, Luxemburg, the Netherlands and Portugal, and they have since been joined by Slovenia (2007), Malta and Cyprus (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015).